Hedgehog (Hh) is a morphogen, a secreted signaling protein important in pattern formation during embryonic development in Drosophila. The receptor for Hh is Patched (Ptc), a transmembrane protein that, in the absence of Hh binding, inhibits another membrane-bound protein known as Smoothened (Smo). This interaction allows an intracellular complex to trigger the cleavage of the protein Cubitus interruptus (Ci), thereby generating a transcriptional repressor. If Hh binds to Ptc, however, Smo is no longer inhibited and, instead of becoming cleaved, Ci translocates to the nucleus where it activates gene transcription. The Drosophila lipoprotein particle Lipophorin binds to Hh and is important for its long-range movement and signaling. Heparan sulfate proteoglycans (HSPGs) are also important for the trafficking of Hh, and the glypicans (lipid-linked HSPGs) Dally and Dally-like (Dlp) are necessary for normal Hh signaling. Eugster et al. investigated a possible relationship between Lipophorin and the glypicans in the Hh pathway. The authors expressed green fluorescent protein (GFP) fusions of Dally and Dlp in Drosophila imaginal disc cells and used differential centrifugation to show that both GFP:Dally and GFP:Dlp existed in both membrane-bound and released forms. Lipid fractionation followed by Western blotting analyses demonstrated that both GFP:Dally and GFP:Dlp associated with Lipophorin particles, and analysis of mutant forms of GFP:Dally showed that it interacted with Lipophorin through its HS domain. A mutant GFP:Dally that did not contain a glycosylphosphatidylinositol (GPI) anchor (GFP:DallyΔgpi) coimmunoprecipitated with Lipophorin. Immunohistochemical analysis showed that Lipophorin bound to GFP:Dally and GFP:Dlp in the dorsal compartment of the wing disc--an interaction that was dependent on HS. Quantitative immunostaining of Hh targets revealed that Hh signaling in dally mutant discs was reduced and that this was due to lower Ci activity in dally mutant discs than in wild-type discs. Expression of GFP:DallyΔgpi in dally mutant discs extended the range of Hh target production, essentially reversing the dally phenotype. Antibodies against GFP coimmunoprecipitated both Lipophorin and Hh when extracts from cells expressing either GFP:Dally or GFP:DallyΔgpi were analyzed. To confirm this association in vivo, the authors performed immunohistochemical analysis of wing imaginal discs of flies expressing GFP:DallyΔgpi and found that it colocalized with Lipohorin, Hh, and Ptc in the endosomes of targeted tissues. The authors suggest that Lipophorin particles pick up secreted Hh and released Dally from the apical lumen and are then internalized at the apical surfaces of receiving cells. They hypothesize that the presence of Dally in these particles enhances Hh signaling, possibly by the formation of a signaling complex with Ptc.